How Transparency Empowers Your Business
Technology can be key to shaking up opaque practices.
A version of this article first appeared on Business.com
Technology drives many changes in the business world, but the most significant driver is the demand for transparency. Employees expect engagement, context, and an opportunity to have their voices heard.
Transparency represents all of those expectations and more because it nurtures trust. According to one survey, 35% of professionals said they would look for new jobs if they could not trust their managers. When leaders are open and candid with their teams, they don't just earn people's confidence – they create an ongoing dialogue that proves they value everyone's input.
Despite the advantages of transparency, plenty of companies continue to operate opaquely. That sort of environment breeds anxiety and mistrust, and it can make it difficult for companies to pivot when necessary. If people have no idea why you are making changes, they naturally are going to resist those shifts. As long as you are straightforward about what's happening, they will do whatever they can to help the company succeed.
For too long, leaders were content to take an "out of sight, out of mind" approach to business functions. As long as everything seemed like it was working, they thought it was best not to disrupt the status quo.
But technology can be the key to shaking up the status quo that hinders growth and ultimately breeds resentment. Leaders should see technology as an ally in cultivating the sort of transparency that can help them build healthy, energized organizations that provide clients and customers with top-notch service.
Innovative companies take transparency to the next level
To use the financial industry as an example, firms such as Betterment and Wealthfront are thriving because of their innovation and transparency. Their founders developed business models around the concept of democratized investing, which clearly struck a chord with consumers. Unlike the industry's old business models, in which a money manager's incentives sometimes conflicted with his or her client's best interests, investment startups are lowering costs and breaking down existing barriers through the power of transparency.
Wealthfront, for example, offers automated investments in 11 different asset classes. The platform has each user fill out a brief questionnaire when creating an account, which enables it to identify risk tolerance. Wealthfront – and other industry disruptors – have clear and easy-to-find fee structures, relying on robo-advisors to help customers meet their financial goals based on mathematical rules and algorithms.
Entrepreneur Al Goldstein has staked his consumer lending startup on the exact same concept. He and his partners at Avant plan to serve 40% of American consumers with a hyper-transparent banking platform. Why? They have realized that this transparent business model is the way of the future.
Avant has disrupted the lending sector by using its proprietary software platform and machine learning to lower the risk of borrowers defaulting on loans. The company pairs customer data with machine learning, analytical tools, and algorithms to determine customized rates, amounts, and lengths for its loans – leveraging technology to change the lending game.
Amazon has applied a similar mentality to its offerings. The company thrives by promising consumers three things that never go out of style: more, faster and cheaper. All three qualities are tied to transparency and lie at the heart of customer loyalty. In one study, 94% of respondents said they are loyal to transparent brands; in the same survey, 73% of respondents said they would be willing to pay higher prices if it meant they were doing business with fully transparent companies.
Like these companies, you can use technology to build a transparent and open business model. By emphasizing transparency internally and partnering with vendors that prioritize it along with empowerment, you can create a strong and sustainable organization.
Build transparency into your company's DNA
Transparent, democratic leadership invigorates employees and improves customer experiences. Creating a transparent culture enables everyone to buy into the same vision and also promotes trust and accountability. Most importantly, it makes employees feel that they are valued contributors to something bigger than themselves.
Here's how to use technology to develop a culture of transparency in your organization:
1. Establish an open policy on financial data. Employees value transparency more than any other workplace attribute, so you should share what's happening in the company with them. Don't get hung up on your financial data ending up in the wrong hands; set guidelines for information that must stay in-house and trust that your team members will honor those rules.
Hold regular meetings to review company financials so that people feel motivated in good times and bad. If you only open up during a crisis, your appeal to their loyalty will ring hollow.
2. Encourage mutual communication. Great ideas can come from anybody and anywhere. Be open and willing to change if an employee offers a better idea. Use technology to share new initiatives and mistakes, listening sincerely to feedback from your team members and customers alike.
Netflix has a saying: "We help each other be great." One way the company supported its motto was by implementing more transparent compensation policies in response to employee input. Netflix's success with this approach provides a good example for companies that might be interested in adopting similar policies.
Your employees know what works and what doesn't, and they can improve the organization with fresh ideas.
3. Nurture creative thinking. When you share what's happening within the company, expect – and embrace – plenty of pushback as well as new ideas. The best innovations sometimes come from unlikely sources. By nurturing their creativity, you will encourage your team members to stay sharp.
You will also attract and retain high-performing people who seek new challenges. You can help your organization remain competitive and creative by providing a supportive environment in which people feel free to experiment, fail and iterate.
A truly transparent future
Fast-scaling companies such as Wealthfront are built on the concepts of transparency and democratized information. With more than $11 billion in assets under management at Wealthfront – and another $16 billion at Betterment – the idea clearly is catching on with consumers.
People value having their voices heard and feeling like they are part of something bigger than themselves. If you are more concerned with corporate processes and chain-of-command, it's going to be incredibly difficult to attract the best and brightest individuals to your team.
The companies in the best position to succeed are those that keep their teams stocked with high performers capable of fast decision-making. Freedom and responsibility backed by a culture of transparency and candor should be among your highest virtues.
The archaic cloak around businesses and employees is over – consumers don't need complicated business models with layers of fees baked in. Amazon, Wealthfront, and Betterment have shown us simpler value-added models that customers prefer. And as far as employees are concerned, they are the human extension of these organizations and need transparency to serve their overarching missions. If there are extra layers, extra costs, or unnecessary processes, transparency will seek out a better way.
Business environments change rapidly in this digital culture, but transparency will remain a constant. Employees are not willing to be kept in the dark. They want to know who they're working for, how the company is doing and how they can make a meaningful contribution. Using technology as a tool to keep your company an open book will empower employees, make customers happy and provide opportunities for your business to grow and improve.
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